tv Nightly Business Report PBS July 12, 2014 1:00am-1:31am PDT
this is "nightly business report" with tyler mathisen and susie gharib. >> vital signs, wells fargo hit by a drop in mortgage lending, what that says about the health of the housing market and one of the nation's largest banks. tech talk, next week's earnings focus, technology companies, expectations are high, so will the numbers measure up? >> and the doctor is in, why senior physicians are using a computer for routine visits might be just the beginning. we have the second and final part of our series, telemedicine. that and more for "nightly business report" for friday, july 11th. good evening, everybody and welcome. the first of the major banks to report profits did so today. wells fargo, the biggest lender
overcame a drop in revenue to report profits of $5.3 billion. mortgage originations were way off, down 58% as refinancing basically dried up but profits were helped by stronger lending overall, securities trading and lower loan loss reserves. still, investors pushed down the stock of the nation's most valuable bank. it closed about a half percent lower as analyst pointed to rising ex spen rising expenses. a look at the banks that may post earnings next week. >> reporter: wells fargo reported profits that matched and sales that beat analyst expectations. many investors pay attention to the earning's report because it shows the health of the real estate market. wells fargo is so big it makes an estimated one out of every six home loans in america. it made more loans than the
previous quarter but less than the same tyime last year when interest rates at low levels led to a huge wave of mortgage refinancing. chief financial officer thinks americans aren't as enthusiastic about buying homes as in the past. >> what is holding people back from what we might have thought would happen in the purchase market is a combination of available supply, it's harder to find a home in certain markets, either because people are priced out or new home development isn't what it was before the crisis. that's at the margin one item that we're looking at. >> reporter: that would be a head wind to the banks going forward and wells fargo is keeping a close eye to see if it will have an impact. >> the purchase market should benefit from the fact that affordability is good. home prices are up 8% year over year but moderate compared to the peak, and rates, while they moved up a bit are still at generational lows, so if long
rates move up materially over time, absolutely that will have an impact of curtailing origination. >> reporter: wells fargo looks at the main street side of the business. next week all eyes turn towards the wall street side with big banks like jp morgan chase, citi group and goldman sachs who have investment banking and trading. for "nightly business report", i'm dominic chu. a descent finish to a lousy week in the stock market. stocks bounce back from a string of losing sessions, but the nasdaq and the s&p still posted their biggest weakly losses in three months. the dow rose 28 points today, the nasdaq up 19 and s&p added about three points. for the week, the nasdaq was the biggest d biggest decliner but the dow and s&p fell by less than 1%. we just talked, dominic chu reported on the bank earnings that come out next week but results will come in from top tech companies.
the sector has been a strong performer this year, and the results could determine whether the sector can maintain the momentum. josh lipton has more. >> reporter: expectations are high, analysts see second quarter earnings up about 7%, which is higher than expectations for the overall s&p 500. revenue growth is seen growing a solid 5.5%, double expectations for the overall market. wall street's strategists say many tech companies are among the most strongly managed businesses. >> the strongest balance sheets of most companies in america, very strong cash flow. their earning's growth and overall earnings by the way since 2000 have become among the most stable earning companies in the s&p 500. >> reporter: tech companies now make up about 20% of the s&p 500 so how these companies perform has a big impact on the market. yahoo kicks off the tech
earning's parade next tuesday. expectations are for flat growth and investors are frustrated with that lack of a turn around at the company, still yahoo bulls say marissa mayer's focus on improvement and user engagement will eventually pay off and you're looking for yahoo to benefit from the 23% stake in alibaba which will likely go public in august. intel reports a few years ago the chip giant raised estimates for stronger demand in commercial pcs. sales are up by 7% in the second quarter, the stock is near a ten-year high but the question for investors is whether any of that pc optimism is spreading to the consumer side of the business. from chips to bids, on a wednesday investors will hear from e bay where there have been a lot of fireworks. carl icahn campaigned to get e bay to separate the unit between
the act and company but david marcus, the head of the pal pal unit left for facebook. ebay stock is firmly in the red but telling clients to buy. they argue paypal will remain a dominant player. the busy week is capped off with a big name, google. investors will focus on search volume and search pricing, which has been falling. that's because advertisers don't want to spend as much on mobile ads but the company's very strong share in the core search business. tech is an economic sector so it's a bet on the global economy. josh lipton, "nightly business report", silicon valley. now, as for retail earnings, those reports will come out in a few weeks but investors got a lot of ominous hints this week they will not be so good. there was a course of complaint
from one big retailer after another saying sales are week, the reason, not the bad weather like the winter but the blame goes to the consumers. consumers aren't spending like they used to and as one ceo put it, they are in a funk. >> reporter: rent a center joined the cohorus today. the ceo warned of warnings because of economic pressures and consumers. the finger pointing began tuesday when container store chairman said we are experiencing a retail funk, an acknowledgement lower earnings aren't just due to the deep winter freeze anymore. bob evans blamed on going head winds including higher food costs, which of course, affect all of us. walmart's domestic chief says it's not getting better but it's not getting any worse. he notes that consumers from the middle class and down just don't have the confidence to open
their wallets. that's clearly the case at walmart where sales have been down five quarters in a row and expected to be relatively flat when the retailer reports next month. it's a sentiment echoed by family dollar, which reported profits fell by 1/3rd. the ceo says it's rough and the low-end consumer has not benefitted in the recovery. >> is retail in a funk? let's turn to dana telse which focuses on the industry. good to have you back. >> nice to be here. thank you for having me. >> funk or sick of the junk the stores are selling, the same junk? >> a little bit of both. the weakness in the first quarter you had carrying over into q 2 as retailer haves goods to move. the second half of the year we should be cleaner on inventory and consumer haves more choice. the macro data points you
suggested are not getting worse but need to give the consumers a reason to spend, innovative product, michael kors, kate spade, victoria secret is carefully selected where they will open their wallets. >> so when you go in these stores, what are you seeing? who has it right? >> what i'm seeing who has it right, michael kors, kate spade. we're seeing other companies for example like old navy where traffic is and it's the international apparel retailers. look at h and m that say sales rise 23% or uni glrks low. they are giving more competition to the domestic retailers. >> what are they doing right, specifically, dana. products, artful merchandising? is it specifically? you mentioned a couple of them, a lot of them are higher end, h and m is not, old navy is not particularly, but it sounds like you're saying the higher end retailers are more inclined to
get it right. >> they are and it's a category, accessories doing better. the other category is active wear and athletic that seems to be taken share from denim and logo and when you walk in a store, what do you see? look for the signs of traffic and need to see less promotional signs. when i look at h and m or fashion retailers they have tre trending product. >> consumers trading down, instead of going to walmart they are going to walmart or the dollar store and instead of the container store they will go to target. is that a trend impacting why people say it's in a funk? >> they don't have an unlimited wallet. are they going to restaurants? they can't have everything, so they are choosing more carefully. >> one stock you like is via corp, they have north face.
i don't know a kid in my town that doesn't have a north face parka. they are getting it right, aren't they? >> they are and other brands are getting it right, too, not only north face, vans, timber land, very successful at running the product brands. >> you also have j.c. penney, a fan of j.c. penney which kind of surprises me, what are they doing right or wrong? >> better than it was last year and certainly the comparisons are easy. they put in the marketing and promotions to drive traffic and put in the brands people are familiar with and the home business has a better assortment given it's been reasoerted than a year ago. if people are looking for inextra meai increate mental signs of change, they are getting it. >> thank you, you always deliver. >> thank you. still ahead, the one piece of investment advice our market monitor says you need for this market as uncertainty and
volatility creep back in. good news out of washington, the june budget spur plus of 71 beside, so this puts uncle sam on course for the lowest annual budget short fall since the year 2008. part of the reason, tax recements are up 8% year over year. that smaller deficit may come in handy after google business economist just cut the growth forecast for the past three months. the national association for business economics lowered the second quarter outlook from 3.5%, just a month ago to 3%
right now but the group is still optimistic about a rebound from that disastrous first quarter. >> also from washington, president obama has enlisted the help of 26 major corporations in a new initiative to get them to pay their suppliers faster. the idea here, the faster those small companies receive the money they are owed from giants like apple, fedex, ibm, the quicker they can deliver goods, get more business and maybe higher more new workers. >> more workers is part of the reason three of the biggest names in business took a stand in blasting congress to get to work to pass an immigration reform bill. in a new york times editorial today, investor warn buffet, bill gates and casino magnet sheldon adelson says reasons why immigration reform is good for the country. >> the shares of some mortgage
insurers fell in reaction to proposed regulations. the federal housing finance agency wants to tighten requirements for private insurers that do business with fannie mae and freddie mac, companies like mgic, radian group and genworth. it will make sure they have enough money on hand to pay claims. investors weren't pleased, shares of mgic fell and radian fell and genworth down by 2.5%. a move that would combine two of the biggest tobacco companies. there is a lot of speculation but now the cigarette makers are confirming talks and in discusses with britain's imperil tobac tobacco. shares down to 61.75 and
lirillard to $61 and change. shares of amazon jumped on news the online retailer asked aviation regulators for permission to conduct outdoor drone tests near the seattle headquarters. the company hopes to deliver packages by drone. the strong rose to $346.20. shares dropped and revenue that was slightly below forecast. the company that sells fasteners and industrial supplies says it is facing gross margin challenges. the stock fell to $46.15. whirlpool is buying a majority stake worth a little over a billion dollars. the appliance maker says the deal with strengthen the european manufacturing operations. shares up 1%, $140.76 was the close there. tonight's market monitor has one important word of advice to investors right now, diversefy,
he's bruce mccain. bruce, we always hear this, d diversify, diversify. >> it's just important to have some things that will do well under a variety of outcomes as you look to what the fed will do and what overseas markets will do, as well as the trends here in the united states. >> when you say diversify, how do you think most people should do that? are you talking about changing the mix of stocks and bonds, changing the mix of large and small caps, international versus domestic, what? >> i think having represented proportions that are there in accordance with the good solid long term plan but certainly small cap and large cap and international as well as domestic and making sure you have a good solid equity exposure and relative to what you need over time. >> bruce, you've given us a
couple stocks you want to recommend to viewers all in different industrieindustries. let's begin with conaco phillips at cop ticker symbol. why do you like this since the stock had a good run so far this year? >> it has had a good run but one of the things our analysts likes about that is the fact he thinks we will get revision of multiples and they will pay more for that stock over time as they see that it's better able to grow its reserves. so not only do you have a company doing well with exploration and production but you'll get a higher multiple and a higher dividend yield to boot. so you win on several different fronts there. >> so let's turn now from the energy field into the health care field, mckessin is another pick. >> yeah, we like the fact that not only do you have the increased need for health care with the ageing of the baby boomers but also with the affordable care act, we're going to look not only for increased health care provision but also cost effective provision and a
drug provider whole saler like that is certainly an important part of the treatment mix there. >> and the other one that you're recommending is disney, the stock is at 86 now. would you put new money in this now given also it's had a good run for 2014? >> it has but one of the things about disney is not only is it a good growth stock with solid franchises with star wars and marvels that give it upside potential in earnings but a more conservative stock in the sense that when people really become worried about the markets and trends, disney is the sort of stock that will attract new money and help to hold up the values. so not only does it provide a diversification into the consumer discretionary but a little place to safety, quality stock. >> bruce, did anything happen in cleveland today? >> you mean, other than the fact that everybody is celebrating lebron james coming back?
nothing at all. >> are you long the cavaliers and short the miami heat or what? >> we wouldn't short the heat but the pros spegt -- prospects look better for the cavaliers. >> better than 24 hours ago. if you're not in miami, people are excited for cleveland, including my co-anchor who grew up there. >> bruce knows i'm a clevelander and not only lebron news this week, what a week, republicans will hold their convention there in 2016 so good things happening to the city that was once called the mistake on the lake. >> there is a lot to be discovered here and we invite everybody to come see. >> any disclosures on the three stocks you recommended? >> no, i don't personally own any of those. >> thanks a lot. have a great weekend celebrating that lebron victory. >> good to be with you. >> tyler? >>. as we just mentioned, lebron games is returning to the cavaliers, not just a sports
story but business. "forbes magazine" said last year the team was worth over $500 million with attendance at 4% of capacity. that was then. now the return of the king means the value of the franchise will immediately increase by as much as $150 million. on expectations of sell out crowds, higher prices, the luxury suites and premium seating, more team sponsorships, higher tv and radio advertising revenue, that is the lebron effect. coming up, the biggest opportunity yet in the game and changing field of telemedicine. bertha coombs concludes the series next.
prices tumble to the lowest levels in years after the department of agriculture raised supply forecast. about 3/4ths of the nation's corn and soybean crops are in good or excellent condition. ideal weather in the united states is fueling expectations that bumper autumn harvest will expand investorry. that's why the price of corn and wheat fell to a low. good news for drivers on the east coast. the energy department planned gasoline reserves for the northeast region is in place and ready in case of the supply disruptions to the height of this year's atlantic hurricane season. the 1 million gallon gasoline stockpile was created since the 2012 super storm sandy left many east coast motorists and home
generators without fuel for days. >> federal safety regulators are looking under the hood at ford. they are examining half a million cars for a heat shield that can rust, fall out and cause drivers to lose control of the staring. the investigation covers ford's crown victoria, grand marqee. car trouble at chrysler, the auto maker recalling 650,000 jeeps and down suvs to replace the wiring in the vanity mirror lights to prevent a short circuit. you can never do too much for vanity. the recall includes some 2011 through 2014 jeep grand cherokees and dodge duran goes. you'll remember that last night we told you about the growing trend in so-called telemedicine. the low cost way for patients to stay in touch with doctors. today we take a look to the
doctors adapting to this form of medical care and one of the companies behind it. >> reporter: tim howard never thought he would leave his practice but got fed up with insurance red tape that left less time for patients. >> my heart and soul is a fally practition practitioner. >> reporter: the family doctor found a new lease online. >> i've really become closer to patients in that moment than having to work through all the administrative in my office. >> reporter: the ceo says they have a waiting list of doctors wanting to join but five years ago there were skeptics. >> people wondered whether this was real medicine. it legit miizes and makes peopl comfortable. >> reporter: their corporate clients include home depot and a retiree plan that embraced the 40 to $50 flat fee visits. with 8 million users, teledoc is
a leading player but competition is heating up. well point launched a rival service. jason welcomes them. >> it's really hard to scale. what we're going to do over 300,000 remote consultations this year. >> reporter: not just for routine care. they are expanding into mental health. >> things like grief counseling, minor depression, anxiety issues that aren't chronic, we're giving patients the ability to schedule multiple interactions with the same care giver. >> reporter: the industry's biggest opportunity may be helping health systems monitor post op patients and people with chronic medical conditions, especially the elderly, but first, they have got to get state and federal regulators on board. >> the big barrier is payment. it's difficult to figure outweighs to pay for invasion.
>> reporter: so far medicare and medicaid have been cautious about telepedicine reimbursement and the medical medical association backed the industry. analysts say now it's a matter of time. bertha coombs, "nightly business report." and to read more about telemedicine and why it's a game changer, log on nbr.com. as the world cup soccer tournament comes to an end, it's time to wrap up the nbr ultimate stock cup. over the past month we put rival global brands and here are the stocks you picked. on tuesday's challenge google beat out alibaba and the other winners looking back are pepsi co over coke, apple, or kill,
mcdonalds ge, toyota and nike. >> who do you think? >> nike. >> i understand he's a good soccer player, your son. >> he's pretty good. >> that's it for us, i'm susie gharib. have a great weekend, everyone. >> i'm tyler mathisen, i almost forgot who i was there. i'm so giddy about lebron and going back to her hometown. have a great week, everybody, we'll see you monday, everybody.
gwen: the fight between the white house and congress grows bitter. the hostilities between israel and gaza grow deadlier. and a top u.s. spy is kicked out of germany. we explore the chasms and the possibilities for compromise on all three fronts. tonight on "washington week." >> not in murietta. not in murietta. >> no papers, no fear. our children stay here. gwen: the immigration debate. takes a fierce new turn. as house republicans prepare to sue the president. >> this is a problem of the president's own making. he's been president for 5 1/2 years. when is he going to take responsibility for something? >> you hear them, sue him. impeach him. really?